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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
An ombudsman’s view
of good costs service
Second edition
2
Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Contents
Introduction .................................................................................. 3
Pre – engagement ......................................................................... 4
Providing information (before a consumer becomes a customer) ............................ 4
Initial consultation meeting ...................................................................................... 4
Charging structure ................................................................................................... 5
Service and case options ........................................................................................ 6
Reasonable estimates ............................................................................................. 7
VAT, disbursements and additional costs ................................................................ 8
Engagement .............................................................................. 10
Client care letter .................................................................................................... 10
Terms and conditions ............................................................................................ 11
Delivery of service ..................................................................... 12
Managing cost changes ........................................................................................ 12
Price caps and managing affordability ................................................................... 13
Overall costs ......................................................................................................... 13
Billing .................................................................................................................... 14
Payment ................................................................................................................ 15
Enforcement .............................................................................. 16
Further information .................................................................... 17
Contact us ................................................................................. 18
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Introduction
This guidance sets out the Legal Ombudsman’s view of good costs service. Costs and
cost information frequently feature in the complaints we receive. In 2018-19 13% of the
cases we accepted included a complaint about costs.
We first published this guidance in 2014. In this updated edition we look at how the new
transparency rules will inform our investigations going forward, as well as some of the
common causes of costs complaints such as the information provided, the charging
structure and managing changing costs.
While price transparency is at the forefront of everyone’s minds at the moment, we
encourage firms to think about how you share information about costs throughout the
work you do, as the clearer and more consistent this information is, the more readily
understood it is and the greater the chance of customer satisfaction.
This guidance includes a range of case studies which will also provide insight into how
we resolve complaints. For further information the following guidance is available:
- Guidance: Our approach to determining complaints
- Guidance: Our approach to putting things right
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Pre – engagement
Providing information (before a consumer becomes a customer)
The root of a legal service starts before a consumer formally engages a lawyer. A
lawyer’s website and marketing material may provide information that leads to someone
choosing to engage their services, so it is important that the information is clear and
doesn’t mislead consumers into paying for a different service than the one they asked
for.
The new transparency rules require certain information to be provided up front in
particular areas of law1. We recognise that you won’t be able to cover all the different
circumstances that could affect the cost of a piece of work on your website, but you
might want to make it clear what the expected costs would be for a typical instruction and
some typical examples of things that would affect the price.
It will also be useful to keep a record of the information displayed on your website, and
when and how it changes. If a customer makes a complaint in the future about your initial
costs information this record will be useful to demonstrate what they would have seen at
the time.
Was the general information/marketing material accurate and consistent with the
service the lawyer provided?
Initial consultation meeting
Some firms offer free initial consultation meetings. It is reasonable for a lawyer to charge
an initial consultation fee if they wish to, but they must make any charges and conditions
clear to a consumer before the appointment is made. The charge made must also be
reasonable. The consumer should know where they stand when they walk through the
door and not hear of any charge, if there is one, for the first time at the consultation.
Similarly, if a firm offers a free one hour consultation, it should be made clear if time over
and above this is chargeable, and what the charge would be.
1 The SRA, CLC and CILEx Regulation have all brought in transparency rules on price information, and relevant
information is available on their websites. The BSB rules will come into force in the coming months.
Case study: Mr B went onto firm N’s website to get an online estimate for his house purchase. The website advertised a price match offer if another firm provided a lower quote. Mr B found a quote from another firm for £995. He sent this to firm N expecting to benefit from their price match offer. Firm N completed his house purchase but sent him a bill for £1,500. When we looked into the case we felt that the information on firm N’s website had been misleading. The firm agreed to informally resolve the complaint and reduce the price to fulfil their price match offer.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Did the lawyer make any charges or conditions for an initial consultation clear
before the appointment was made?
Charging structure
A customer should never be surprised by the bill he or she receives from a lawyer.
However, it is clear that some customers who come to the Legal Ombudsman have
failed to understand the basis on which they were billed. This is not helped by the
different sorts of charging structures lawyers currently offer: fixed fee, hourly rate,
damages based agreement and so on. Each of these is different and each has
advantages and disadvantages from the customer’s (and lawyer’s) perspective.
Whatever charging structure a lawyer uses, we would expect the lawyer to explain how it
works, and what it does and doesn’t include. It must be crystal clear.
Was the charging structure clear?
Case study: Mr G approached firm H for an initial consultation. At no time did the firm discuss costs with him, so he thought it was free. After the meeting, Mr G received an invoice for £400. We investigated the complaint and firm H confirmed they had not told Mr G he would be charged for the consultation because they felt it was obvious as Mr G was receiving a professional service. However, we concluded that, as many service providers (including many lawyers) offer a free initial consultation, Mr G’s assumption was reasonable. Even if it was obvious, there would be no way that he could have been properly informed about the actual charging rate if he wasn’t told. Firm H agreed to informally resolve the complaint and waived their fees for the meeting.
Case study: Miss K instructed a firm to represent her in a tribunal. The firm was instructed at the last minute and agreed to represent her for a fixed fee. However, the judge adjourned the tribunal hearing as the other side had not prepared the correct paperwork. When the case was concluded, the firm invoiced Miss K for the fixed fee plus a further cost for the later hearing. They felt the additional amount was necessary because they had turned up for the initial hearing. We decided the firm should halve their fee for the final hearing. We accepted that they had carried out a substantial amount of work, but we felt the firm should have told Miss K they would need to charge an additional amount for their second attendance.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Service and case options
There are various ways that a case can be progressed. Each of these ways has
advantages and disadvantages and potential cost implications. Lawyers have a
responsibility to give consumers the best possible information and advice so they can
choose the way of dealing with their case that suits their needs.
We expect lawyers to advise consumers about their options, by providing a cost benefit
analysis, so they understand the choices available to them and their implications. It will
allow them to make informed decisions about whether it is in their best interest to
continue with a case and, if so, how they should proceed. Although consumers are often
making a guided choice, it is important they understand why the lawyer is recommending
one particular course of action and what the costs implications are. This information
should be provided before any work starts and it should be updated, when appropriate,
as the case progresses.
Keeping a good record of what has been agreed often resolves disputes before they
become a major disagreement. We will look at the information given about costs as part
of our investigation, whenever that is in dispute. However, simply providing the
information isn’t always enough: it needs to be in a suitable format presented in a way
that enables the customer to understand what it means for them.
Case study: Firm D was instructed to administer the estate of Mr J’s late mother. Mr J was a beneficiary of the estate. The firm’s terms of business explained they would be charging on a time-spent basis. They provided the hourly rate and an estimate of £4,000 + VAT and expenses. The terms also included details of possible charges, which might be triggered depending on the case, such as tax implications or the size and complexity of the estate. One of the possible charges was an additional cost based on the value of the estate. The final bill included a charge of around £3,500 + VAT on top of the hourly rate charges. We decided that, whilst the firm were entitled in theory to charge a value element, they had never made it clear that this would be charged, and how it would be calculated. We decided the estate was entitled to believe that they would only be charged the hourly rate charge. Including some other failings in cost information, we decided to reduce the firm’s fees to the £4,000 + VAT estimate and endorsed the compensation offer the firm made to Mr J personally of £360, reflecting his own upset and inconvenience.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Were all reasonable options given and properly explained? Was a
comprehensive cost benefit analysis provided?
Reasonable estimates
Consumers will almost always want to know what the total cost of their case is likely to
be. A lawyer should use his or her best judgement to provide an estimate. We recognise
that in cases where litigation is likely, it may not be easy to give a precise answer.
However, we believe it is important to manage consumers’ expectations about the
possible cost range. We will ask whether an estimate, however cautious, was given.
We would expect that estimate to give the customer the best information and take into
account information and conditions specific to the case.
It can help customers if they understand what factors have gone into the estimate: why
do you expect the costs to be around that figure? Are there different ranges, depending
on a variable beyond your control (the attitude of the other side in a divorce, the
willingness of the defendant company in a personal injury case to settle, the approval by
a court to dismiss significant parts of the claim)? Highlighting relevant factors at an early
stage will help you discuss any adjustments you need to make to the estimate, as the
case progresses.
We know an estimate differs from a fixed fee, but not all customers understand this
distinction. We therefore look for evidence that this has been explained. An estimate
being exceeded would not automatically constitute poor service, but we would normally
expect to see reasons for this and look for evidence that the customer had been warned
beforehand that this would happen. We would expect lawyers to know the estimate is
being reached and warn the customer accordingly, as the customer may want to change
instructions on how to proceed, in light of this information.
Case study: Mr Q approached a solicitor to provide him with advice in an employment case. He paid £1,000 and the solicitor said he would tell him if the costs increased. The final invoice was for £5,000 but he only received £2,000 compensation from his employer. Mr Q had paid invoices on a monthly basis but there was no evidence the solicitor had given a clear idea of what his costs might come to, or what level of compensation he could expect. We felt the firm had not managed Mr Q’s expectations or given him enough information to decide whether his case was worth pursuing.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Did the lawyer give a clear and reasonable estimate of the costs involved in a
case? Was the status of this estimate explained?
VAT, disbursements and additional costs
Cost complaints often involve disputes about whether VAT was included in the price.
When you purchase goods, the VAT is included, so the amount you see is the amount
you pay. In legal services, we sometimes see client care letters which quote a number
for “our fees”, then explaining that VAT will be added to that. It would help clients if the
total figure was confirmed at that point, so that a client who is told the estimate is £5,000
knows they should really prepare to pay around £6,000. If it wasn’t clear, it is likely we
would find fault and it is possible that we would hold the firm to the lower figure, as that
was what the client was reasonably entitled to expect to pay for the service.
A major cause for complaint is the additional costs which are charged in connection with
a case. These are usually referred to as ‘disbursements’ which means almost nothing to
anyone other than lawyers. Clear, unambiguous language must be used so the
customer knows what these items might be. The estimate given before a case begins
should include all the costs which are likely to be incurred. If it does not, we will ask why.
Sometimes it is not a question of language, but how reasonable the additional costs are.
We would not consider it sufficient to see an estimate which just said ‘disbursements’
with an overall cost against it, nor would we necessarily expect every individual
disbursement to be itemised. What we would want to see is some meaningful
breakdown. We would also expect some costs, such as photocopying, to form part of
the usual service cost.
Case study: Miss F instructed firm E to do the conveyancing on a leasehold property. The firm provided a client care letter and estimate of £700. The instruction later changed as Miss F wanted the firm to negotiate the sale of the freehold instead. The firm mentioned in an email that the new work would cost £1,750 but they did not specify what this would cover and did not issue an updated client care letter. The negotiations became protracted and Miss F eventually decided to swap firms. Firm E sent her an invoice for £2,750. We decided that although the firm had done substantial work, there was poor service, as they had not been clear what the estimate would cover. Firm E agreed to reduce their fees to £2,300.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Did the lawyer explain what disbursements would be incurred as part of the case?
Case funding arrangements
Some customers will be able to fund their own cases. Others will require different
funding arrangements. Many of the complaints we see arise out of difficulties customers
have in meeting the cost of their service.
To avoid such difficulties, funding arrangements should be fully discussed before the
service begins. We will look for evidence that the lawyer has discussed funding options
such as insurance, unions and legal aid (even if in the latter case, the lawyer in question
isn’t registered to provide the service and by doing so they may potentially lose
business). We will also want to know if any potential affordability issues have been
identified and what options the lawyer has discussed to give the customer greater
control of their costs.
It is important that lawyers consider their customer’s circumstances and follow the
principle of acting in their best interests. In the context of service, this includes helping
the customer to make good decisions about how best to fund their case, which involves
making them aware of the options available to them.
If a lawyer has carried out work privately while a customer’s application for legal aid was
going through, we would expect there to be good reasons why the lawyer didn’t delay
work until the results of the application were known. We would also look for evidence that
the lawyer had consulted the customer about proceeding with the service privately.
Case study: Mr J instructed firm H to deal with the purchase of his house. He received an online estimate for £500 which included the firm’s fees and disbursements such as land registry costs. When the sale completed he received an invoice for £700. The extra £200 was for electronic transfer fees and some additional searches that had not been included in the original estimate. While these fees were reasonable, we decided that the costs information was poor as there was no reason why the firm could not have made Mr J aware of these in the estimate. The firm agreed to pay £100 to informally resolve the complaint.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Engagement
Client care letter
Once a consumer has decided to engage a lawyer, both parties need to understand the
terms of engagement – what will be provided and on what basis. In most cases, this will
usually be in the form of a client care letter. This is one of the key pieces of evidence we
rely on to make decisions, so it is important to get it right. The letter needs to be framed
for the needs of the individual customer, too.
To make the letter explicit about services offered and costs, it should include information
on:
why the customer has decided to engage the lawyer;
the course of action the customer has chosen;
what work will (and won’t) be carried out;
the standards and timescales for the work;
the likely costs of the case based on the information within the letter; and
where any of this differs from the information on the website or in other previously-
shared materials, why this has happened.
If the type of work falls under the transparency rules, we would generally expect the cost
information to include anything required under the relevant regulator’s rules, as that
would be our starting point. We would look at the facts of the case, though, to decide
whether the service was reasonable and, if it wasn’t, what detriment (if any) flowed from
the shortcomings.
Case study: Mrs O instructed firm P to help with a neighbour dispute. Firm P took on the case on a no-win-no-fee basis and took out an insurance policy to cover Mrs O’s legal costs, should she lose the claim. She was successful and the firm deducted £3,000 from the settlement she received, as per the terms of business signed and agreed at the outset. After receiving her settlement, Mrs O realised she had a pre-existing insurance policy which would have covered her for this type of work, meaning that she should never had had to pay anything from her settlement. There was no evidence the firm had ever mentioned to her that she should check whether she had cover. We decided that the firm should pay her the £3,000 back, in order to put her in the position she should always have been in. We also decided that the firm should pay her £250 to recognise her shock at learning that the deduction needn’t have been made.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
The Legal Ombudsman will consider whether, after reading the client care letter, would
the customer have a clear understanding of the likely course of their case, what service
would be provided, and how much it would cost? We would be looking at this to ensure
the information was appropriate for the particular customer, rather than for an average
customer, as cost information – like any information – should be tailored to the needs of
the customer.
Terms and conditions
A lawyer may provide their terms and conditions as part of their client care letter or as a
separate document. We would normally check that lawyers have drawn attention to any
key issues customers need to be aware of affecting the service they provide. In
particular, we would want lawyers to be explicit about any conditions they are attaching
to their service or any risk or liability for costs customers may incur in the future.
In our work, we have seen many examples of terms and conditions which are difficult to
understand. Information should be presented in a clear way, using simple language,
proportionate to the complexity of the case.
If a customer may have difficulties understanding the technical detail, we w o u l d want
to see evidence that the lawyer has taken the time to explain the document. If there’s
something in small print that should have been expressly covered, we are likely to
consider this unreasonable.
Case study: Mrs P asked firm O to represent her in the sale of her home and the purchase of a new house. Firm O sent a client care letter for each instruction setting out their fees, how much they would charge at each stage if the transaction did not complete, and explained what disbursements she was likely to be charged. Mrs P paid a deposit which the firm said would be used to cover the disbursements. Unfortunately, the sale and purchase fell through and the firm sent Mrs P invoices for the aborted transactions. Mrs P complained because she thought that the deposit she had paid should have covered the majority of her costs. We felt, following our investigation, that the firm’s letters had been reasonable as they clearly outlined their fees and explained what disbursements were. We could not have expected the firm to do more in this situation and no remedy was required.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Were terms and conditions expressed clearly?
Delivery of service
Managing cost changes
It is not enough for a lawyer to agree the possible cost of a service at the outset. Many
complaints arise because lawyers have not updated the customer about the cost of the
case as it progresses and, all too often, lawyers fail to give customers the opportunity to
try and control their costs during the lifetime of the service.
In these cases, we will look for evidence that the lawyer has kept a customer informed
about the cost of the case on a regular basis. We will also want to see evidence that
lawyers have consulted their customers on how to manage potential cost increases or
what course to take if new options become available. We would expect the lawyer to
clearly explain the change, any service options, and provide (estimated or real) costs for
them. We would also want to see that the lawyer has asked for instructions on how to
proceed. Even if the lawyer feels that there is only one reasonable option for the
customer to follow, they should not make that assumption on the customer’s behalf.
Did the lawyer consult the customer on any changes to the case that may incur
additional costs?
If a case becomes more complex and the costs will increase as a result, this should be
made clear to the customer. For example, if the lawyer feels a barrister’s advice is
needed the customer should be told why this is, and how much that advice will cost.
If an offer has been made to settle a contested case, the lawyer should ensure the
customer is clear about what this offer entails, and how much they will actually receive if
Case study: Mr T instructed a firm on a conditional fee agreement to obtain a work visa for the UK. The terms and conditions said that a fee of £750 would only be charged if the application was successful, unless inaccurate information had been provided. Mr T could not complete the application and the firm used another part of the terms and conditions to say, that as he had withdrawn his application, he had to pay their fees. We decided that the difference between the two terms was quite subtle and it was not reasonable to expect Mr T to understand the distinction. The firm should have done more to ensure Mr T understood. We concluded that the firm should reduce their fees by £250, as we also felt that Mr T was aware of the risks with his application.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
costs are to be deducted from this. The lawyer should also clearly explain what the cost
implications would be if they decide to reject the offer and continue to fight the case.
Price caps and managing affordability
If a customer and lawyer agree that once the price reaches a certain amount agreement
needs to be sought to proceed further, we would expect this to be followed by the lawyer.
We would also expect a lawyer to discuss cost control options if a customer identifies
difficulties in affording the cost of the case as it develops. In terms of whether the service
provided was reasonable, it isn’t generally enough to say that the additional work done
was for the customer’s benefit, though we will take the value of the work into account
when deciding on the detriment (and, thus, the remedy).
Circumstances can easily change and cases can become more protracted and
expensive than originally expected. In these situations it is not unusual for a customer to
begin to struggle to pay the bills. If a customer raises concerns, it is helpful to see if there
are ways to manage the costs – is there a lower level fee earner who can take on some
work? Can payments be spread over a period of time? It may also be a good time to
discuss how much more work needs to be done and what the exposure is for the
customer, if the case goes through to the end. A customer struggling to find the money to
pay the first half might need to reflect on whether they want to continue with the case.
If a price cap agreement was made, did the lawyer follow it?
If a fixed fee or price cap agreement is put in place, the lawyer needs to ensure that they
tell the customer what this will cover. If circumstances in the case change, the lawyer
should tell the customer, in good time, what has changed and why, and the impact that
this has on the initial agreement.
Overall costs
One of the major areas for complaint is overall service cost. We don’t do detailed cost
analysis, but if a complainant wants a detailed forensic bill analysis, we will usually
signpost them to the Senior Courts Costs Office, if they are still in time to pursue that
avenue.
If the complaint is about the level of the costs, though, we can judge if, overall, those
costs were reasonable. If something seems questionable, such as unrelated, duplicated
or disproportionate costs, then we will ask the lawyer to explain. This might include the
size of a success fee, where we might ask the lawyer to show us the calculation for an
uplift. Alternatively, if a transfer fee in a house purchase that is marked as a
disbursement seems large for a bank’s cost, we would ask the lawyer to show us that
this fee didn’t include the professional costs for carrying out the transfer, which should be
captured elsewhere.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Commonly, when the complaint is that the bill was excessive, it is really a reflection that
the customer wasn’t expecting the bill to be as high as it was. That’s about the cost
information, rather than the costs themselves, and we will be looking at what the
customer should reasonably have expected to pay, based on what information they had.
We would also ask for an explanation if the estimate and overall costs were different, and
question why they were allowed to increase without this being explained.
In some cases, we recognise that cost increases will be due to an unexpected
development in the case or the customer’s own behaviour (such as asking for more work
to be done than predicted or increasing the scope of the work). Here too, we would look
for evidence that the lawyer addressed these issues with the customer during the case
and, where possible, gave the customer options to manage the costs.
Was the final overall cost fair and transparent for the service received?
Billing
One of the common reasons for complaint – and ombudsman criticism – is the
transparency of costs, which could be avoided by better billing. If we have difficulty
understanding the basis and meaning of the eventual bill, it would not be surprising that
we may find this to be poor service.
We look for evidence that the costs identified on a bill were actually incurred during the
lifetime of the case. We would want to know what the nature of the work was and ask the
Case study: Firm B acted for Mr C in a litigation matter. The firm agreed a fee of £500 + VAT (£600) to consider and prepare papers for Mr C’s court appearance, based on the evidence and responses Mr C had already obtained in his correspondence with the other side. The other side’s lawyers wrote to firm B and provided more, significant information. This information raised questions about the claim itself and would warrant consideration, investigation and response by the firm. Firm B rightly explained this to Mr C, explaining that this was not work covered by the original agreement. As such, the firm was entitled to ask Mr C to pay a further £600 for this additional work and we decided that the service was reasonable as a result.
Case study: Mr B asked firm A to represent him to evict tenants from one of his properties. Mr B did not receive a client care letter or an initial estimate at the beginning of the case, although he was later told that his costs would be around £10,000. Shortly before the trial he was told that the costs were likely to be £15,000 for the firm’s fees and barrister’s costs. His final costs were £20,000, but he had never received anything in writing from the firm. The firm agreed that they had not provided Mr B with any clear information about the costs in his case and they offered to reduce their fees to their first estimate of £10,000 plus VAT. We agreed that this was a reasonable remedy.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
lawyer to produce clear evidence to support the bill. The explanation that work was done
unbilled and unrecorded over evenings and weekends does not always convince us that
the billing was fair. It is the lawyer’s responsibility to account properly for items charged
or set out in the bill.
Finally, we would look to relate the billing back to the terms and conditions identified at
the beginning of the service. If the bill contains additional costs which were not identified
before the service began, it may be that we would consider that it was unreasonable to
charge them at the end of the case.
Has the approach taken been reasonable and does the client know?
In assessing whether the service was reasonable, we will take into account the relevant
code of conduct, such as the Solicitors Accounts Rules. We won’t determine whether
there has been a breach of the rules, but it helps us to draw fair conclusions based on
what is expected in a service.
Was the bill clear and transparent?
Example: If a lawyer produces a bill which says ‘work done between the 24 July and 18
August’ and doesn’t provide any further detail, we would consider this vague. We would
want to know what the nature of the work was and will ask the lawyer to produce his or
her ledgers as evidence that it had been done.
Payment
On occasion, disputes arise about payments made (or alleged to have been made) by
the customer to the lawyer. It is not unusual for the Legal Ombudsman to be told that
Case study: At the start of a retainer, firm J asked Mr K to send £500, which included £100 for a court fee and the rest on account to help towards the firm’s costs, which it estimated at £1,000 + VAT (£1,200), if the case went all the way. The case was settled without the need for court, but the firm used the extra £100 towards its bill of £500, thereby meaning there was nothing further to pay. Mr K complained that the firm didn’t tell him what would happen to the £100 for the court fee, if the case didn’t need to go to court. He referred our investigator to Guidance Note 17(viii) of the Solicitors’ Accounts Rules in noting that the money had been “earmarked” for the payment of a court fee. He argued that he should have been told that the firm intended now to use it towards its fees and he should have been given the choice about what to do. While there was no dispute over whether the firm had actually carried out £500 worth of work, we agreed that the firm should have spoken to Mr K in advance and agreed a sensible approach to using the £100 in the client account to pay the balance of the bill.. With this in mind, whilst there had been a failing in the service, there had been no detriment to Mr K, so no remedy was required.
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Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
money had been paid in cash without a receipt or that money had been taken on
account against the promise of later service. In cases such as these, we would usually
consider that the onus is on lawyers to demonstrate that they have properly recorded
any such transactions and have kept the appropriate records. In the absence of such
records, lawyers may be in a vulnerable position when responding to our enquiries.
Was the customer given confirmation of their payment? Were proper records
kept of all relevant financial transactions?
Enforcement
We recognise that there are cases where it appears that the customer is unreasonably
seeking to delay paying the bill for the service they have received. In cases like this, a
lawyer may want to move to enforce the bill rather than wait for the outcome of the
ombudsman process.
We understand that a firm has the right to seek enforcement of an unpaid bill. However,
if a bill remains unpaid, firms should give reasonable notice that they intend to seek
enforcement, and should make the customer aware of the complaints process so they
have an opportunity to raise any concerns. The Ombudsman cannot, and will not,
interfere in a lawyer’s decision to enforce a bill while a complaint is ongoing. However,
where we consider that any action was unreasonable, it will be reflected in the decision
we make and any remedy we order.
Were any actions the lawyer took to enforce payment of an unpaid bill reasonable?
Case study: Firm B were acting for Mrs C in an immigration case. Mrs C was told that it would cost £1,000 and that a deposit of £400 had to be paid. Mrs C paid the deposit and got a receipt from the firm as confirmation. When the work was finished, Firm B asked Mrs C to pay a balance of £800 and insisted this was correct. We found that the firm did not have a clear record of the fees that had been paid. On balance we concluded that receipt from the firm was correct and therefore the outstanding balance was £600.
Case study: Mrs A had instructed a law firm. She told the firm that she had not received their client care letter, but they did not re-send it. They also did not send her regular bills during the course of the work. The firm began proceedings against Mrs A. However, they only sent a final bill at the same time as the letter about court proceedings. The firm agreed to stop proceedings and give Mrs A time to pay the bill.
Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Further information
Guidance
We publish a range of guidance on our website
(www.legalombudsman.org.uk/publications) which might be useful to refer to:
- Guide to Good Complaint Handling, provides an overview of how to respond to
complaints.
- Signposting pack, sets out the signposting requirements and provides suggested text
for you to use.
- Approach to determining complaints, looks at the factors we take into account when
we investigate and the questions we ask to determine if the service has been
reasonable.
- Our approach to putting things right, if we decide the service was unreasonable this
guidance looks at the things we can do to resolve the situation.
- Scheme Rules FAQ, common questions about our scheme rules.
Keeping in touch
If you would like to keep in touch with new guidance, research and courses that we run
subscribe to our quarterly newsletter, LeO News.
Legal Ombudsman A guide for lawyers. An ombudsman’s view of good costs service. Update April 2019
Contact us
We are open Monday to Friday between 8.30am and 5.30pm. If you are calling from
overseas, please call +44 121 245 3050. For our minicom call 0300 555 1777.
You can call us on 0300 555 0333 (Calls to the Legal Ombudsman cost the same as a
normal 01 or 02 landline number, even from a mobile phone, and are recorded for
training and monitoring purposes).
You can also email us at support@legalombudsman.org.uk
If you want to find out more about us and what we do, please visit
www.legalombudsman.org.uk
If you prefer, you can write to us at
Legal Ombudsman
PO Box 6806
Wolverhampton WV1 9WJ
If you need information in another language or in large print, Braille or on audio CD, please get in touch.
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